How to count the years correctly
The Sunday Nation
Nairobi,
27 April 2014
Did you know that if
you have a life insurance policy, you may deduct up to 15% of the
premiums paid from your tax dues? Well, the income tax law allows you to
do this subject to certain conditions; I’ll come back to that in a short
while.
I have discussed the
issue of measuring time on several occasions in the past. The most
recent was in January this year when I pointed out that this is not
Before that, I had
warned that we should be on the look out because, come 2017, our elected
politicians might start arguing that their 5-year term should end in
2018 – after all, they were elected in 2013. But the constitution does
NOT talk about a 5-year term; it says that elections should be held “in
the fifth year” and that will be 2017.
Now suppose you took
out a one-year insurance policy (perhaps, for your car or on your
health) on 1st January 2014, when would it expire? Of course, on 31st
December 2014. It is important to note that this expiry date is the day
BEFORE 1st January 2015.
Therefore, if you had
taken your one year policy on 2nd January 2014, it would expire on the
day BEFORE 2nd January 2015; that is on 1st January 2015.
But the silent
question that many people never ask is at what time does the policy
begin and end? A day starts at 12:00am and ends at an instant before the
following day begins. Thus 12:00am on 27th April 2014 was last night.
12:00am tonight will be tomorrow. That is why we celebrate the New Year
at the stroke of midnight.
Therefore, if the
starting time of a policy is not stated, it should be assumed to be
12:00am on the date indicated. And the ending time will be an instant
BEFORE 12:00am on the day following the expiry date. That is, the one
year policy started at 12:00am on 1st January 2014 and will end at an
instant before 12:00am of 1st January 2015.
Now let’s go back to
insurance reliefs on tax returns. One of the conditions for claiming is
that the policy must be “at least ten years long”. I have one that
started on 25th September 2006 and it will mature on 25 September 2016.
Question: how long does it last? If you said ten years, you are wrong!
From the reasoning above, it is clearly ten years and one day.
So I was surprised
that the KRA online system rejected this policy when I was filing my
2013 tax returns. Thankfully, when I pointed out this anomaly to KRA,
they quickly understood what I was talking about and I am happy to
report that they are revising the software accordingly.
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